Steelmaker Corus posts first profit

The Anglo-Dutch steel group Corus has made its first profit thanks to soaring prices, demand in China and a restructuring of its operations.

The company ended a five-year run of losses by posting pre-tax profits of £163 million, a significant improvement on last year's deficit of £89 million.

The turnaround follows a traumatic start to life for the company, which was formed by a merger between British Steel and the Dutch firm Hoogovens in 1999.

It has since made losses totalling £1 billion and has been forced to cut thousands of jobs.

But Philippe Varin, its chief executive, who was appointed last year, said there had been a "substantial improvement" in the performance of the business, which has plants in Port Talbot, Scunthorpe and Rotherham.

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He said the strong steel market, fuelled by high demand in China, as well as the reduction of the overcapacity in production had helped the company's figures.

But he said half of the improvement in operating profits, up from a loss of £57 million to a gain of £147 million, was down to a restructuring programme that has secured annual cost savings of £220 million.

The company said the pace of improvement had "accelerated sharply" in the second quarter of 2004 and it expected progress to continue in the second half of the financial year.

Despite the progress, uncertainty still surrounds the future of the company's Teesside plant, which employs 2,000 people but has been earmarked to operate as a stand-alone slab-exporter, possibly in a joint venture.

Corus said discussions with a number of interested parties were taking place but did not provide further details in today's results announcement.